Where to Invest MoneyAre you interested in investments? And you do not know how and where to invest your money? Then one of the best option in India is to invest in mutual funds.
What is a Mutual Fund?Mutual fund consists of a group of investment types. There are many different types of mutual funds. It consists of a mix of several different types of investment vehicles, such as stocks, bonds, or derivatives, or it may consist of nothing but stocks that are part of a certain sector of the economy, or it could be just bonds.
Types of Mutual Funds in IndiaIn India there are mutual funds that consist of nothing but technology stocks. There are also mutual funds that are comprised of stocks that have a similar market capitalization (such as mid-cap funds, large-cap funds, or small-cap funds). Some mutual funds might contain several different types of securities (such as stocks, bonds, etc.) that all fall within the same risk classification (high-risk, medium-risk, low-risk).
What is NAV of a Mutual Fund?Like shares / stocks, mutual funds have a price per unit, also known as the Net Asset Value (NAV). The NAV is calculated by dividing the total value of the fund divided by the number of shares outstanding. Like stocks, the price of mutual funds fluctuates on a daily basis and it can be sold just like any other security.
How much Money can I make from Mutual Fund?First of all, when deciding in what fund to invest, you need to think about your investment goals.
1.Long-term capital appreciation
2.Receive immediate income from your investment
3.Evaluate your risk tolerance.
4.High risk fund. Try your luck in a speculative fund to potentially receive a better return
5.Low risk fund. Capital preservation, low growth.
High Risk or Low Risk Mutual fund is better ?If you like to preserve your capital, then you should consider a mutual fund that consists of low risk equities and conservative bond and money market instruments. You can also have a mix of investments, then you should look for a balanced fund. If you have a very high risk appetite , which can give very high capital appreciation, then you should consider a high-risk common stock or high-yielding bond fund.
Diversification of Mutual FundsThe collective funds are invested into a wide range of categories, it can help to reduce risk exposure faced by the investor in the Indian Markets. Suppose the funds are invested in 10 selected stocks, and 4 of the stocks perform badly, in spite of everything the overall performance of your portfolio would not be bad due to the averaging effect of the stocks' performance.
High Liquidity of Mutual FundsMutual Fund Units can be sold easily any time. Asset Management company is always there to repurchase your units.
Professional Management of your FundsThe most important aspect is to manage your money invested in the market. Most people do not have the knowledge, flexibility and the comfort of monitoring the market at all times, it would be great to have a professional hired to sit there and make sure that your money works hard enough for you!
In India the fund managers are professionally trained and have years of experience in their field of expertise, something that not everyone would have.
Initial Capital is very low
To invest into the stock market, a big capital should be available to you, so that you can diversify your investment. On the other hand, in mutual fund, with a small capital spend, you can be part of the bigger investment by the asset management company.